There are two statements marked as Assertion (A) and Reason (R). Mark your answer as per the options given below.

Assertion: There is a third element of BoP (apart from the current and capital accounts) called errors and omissions.
Reasoning: It is difficult to record all international economic transactions accurately.

Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

The correct answer is option 1: Both Assertion (A) and reasoning (R) are correct and R is the correct explanation of A.

Assertion: There is a third element of BoP (apart from the current and capital accounts) called errors and omissions. True. The Balance of Payments (BoP) indeed includes a third component called "Errors and Omissions" to account for discrepancies and missing entries that arise due to the difficulty of recording all international economic transactions precisely.

Reasoning: It is difficult to record all international economic transactions accurately. True. Accurate recording of all international transactions can be challenging due to various factors like timing differences, incomplete information, and reporting discrepancies.

Connection between Assertion and Reason: The Reason correctly explains why there is a need for the "Errors and Omissions" category in the BoP. The category exists to address the inaccuracies and unrecorded transactions that inevitably occur.